This topic seems so silly on the surface but for people who are in debt and avoiding it, it can be a very real issue. They just don’t know how or where to start. Part of the reason the issue of debt is such a massive problem worldwide, is that it is simply easier to avoid it then deal with it. Like so many other things in life, avoiding it won’t make it go away and only compound the issue. Your mind can be very powerful and if you force yourself to forget about something, even for a temporary reprieve, you can. But as I already talked about last week, there are many reasons why ignoring your debt is a bad idea and you need to face it!
To start, prepare yourself mentally to face a challenge. You need to be in the right mind set and have time to dedicate to it. Don’t decide at 11pm on a weeknight that you’re finally going to come up with a plan. You need to make the commitment to change and get the debt paid off.
Sign up for online banking. It’s 2014, I don’t know of a single bank in the world that wouldn’t have online access but it may be something you have to register for. Before your ”debt date” make sure your online banking is established and working.
Pick a date. Set aside dedicated time for yourself (or you plus spouse) to sit down. If you have children, make sure they won’t be a distraction. You need full attention the first time you try to work through this problem. Be comfortable in general. If the day you have set aside ends up going to hell in a hand basket, reschedule but don’t give yourself too much time in between dates, urgency is key.
Gather Info. This includes locating all account numbers and contacts for each account. If you can’t access the information online, be prepared to call the loan issuer to get the relevant information. This also requires basics like having pens and paper around. When you’re getting the information make sure you find out original balance, balance owing, interest rate and minimum payment. With the first phone call just get basic information. Once a plan is in place you may be required to call them back with more precise questions but for now basics only, after all this is a baby-step process
Make the calculations. This can often be the toughest part but it needs to be done. Sit down and finally calculate what the final number is. There are a number of online calculators that can help you if you’re unsure about calculating stuff like interest rate but it’s not as difficult as you may think.
Come up with a plan. Once you know the final number you need to come up with a plan to get it paid off ASAP. This will include looking into your budget and seeing what needs to be done. You may not have to do much other than reallocate some money but more likely then not you’ll need to make changes, cut things out or make extra money and put any extra funds towards your debt.
Facing your debt for the first time can be daunting but a very necessary thing to do. Once you have a plan in place you will feel much better, trust me
Any other tips for someone preparing to deal with their debt for the first time?